Who hasn’t been through this during the startup phase: it takes quite a while to attract customers, fulfill the first orders, and start receiving payments. Unfortunately, there are few financial support options to bridge this gap. If you’re unemployed before starting your self-employment and are eligible for Unemployment Benefit I (ALG I), you may you the Employment Agency support you with a startup grant, provided you meet the requirements:
Consider whether you are eligible for the startup grant. Regardless of that, however, your ALG I benefits also provide a solid foundation for starting a business, for example, as a side hustle.
The startup grant can be paid for the first 6 months and, if applicable, for an additional 9 months at a reduced rate; however, it is subject to strict conditions:
- At the time you begin self-employment, you are still entitled to at least 150 days of ALG I benefits.
- You are personally and professionally qualified
- You submit a viable business plan that has been endorsed by a competent authority
- If sustainable integration—defined as placement in employment subject to social insurance contributions for more than 6 months—is expected, this precludes eligibility for assistance (priority for job placement)
- In the event of a business takeover or the conversion of a part-time position to a full-time one, the individual’s ability to contribute their own labor must be carefully assessed
- If the employment relationship was terminated by the employee’s own resignation or by a termination agreement without just cause, the startup grant must be denied.
As you can see, it’s not as easy as it used to be to get approval. You have no legal right to it.
However, if you are professionally qualified but, for personal reasons, are unable to secure employment subject to social security contributions, you should apply for a startup grant.
The Employment Agency reviews each application on a case-by-case basis.
Please also keep in mind that you can certainly start a business while receiving unemployment benefits, even without a startup grant. This is possible by starting a business as a side hustle. You must remain available for work and build your self-employment on a part-time basis. During this time, you will continue to receive ALG I and the corresponding social security benefits.
And if that dream job doesn’t materialize, you’ll have used your time of unemployment to build something for yourself. If you earn money during this time: go for it! Be proud if things work out even in the early stages! The fact that your income must be deducted from your ALG I benefits up to a certain exemption amount is a matter of course and doesn’t hold you back in any way. Don’t let this deduction limit you—disclose your earnings with confidence. After all, your goal isn’t to maximize your unemployment benefits, but to maximize your revenue.
Also keep in mind that even as a self-employed person, you can—and should—pay unemployment insurance premiums.
And: Be sure to seek advice from the experts at the Employment Agency. Our experience with them has been absolutely excellent.
Best regards and good luck!
Martina Loose
Ulm Employment Agency
